Production may be defined as the transformation of inputs into output. It is the creation or addition of utilities to things. In another words, production is the transformation of inputs into output of goods and services. For example, producing maize, we use inputs like, land, labour, labour, seeds fertiliser and water. A doctor’s or a clerk’s service is also production
One aspect of production which is of the greatest importance is how much is produced per hour or per day by each unit of land, labour or capital. Measuring the output of a factor of production against time is known as productivity of that factor of production
Productivity: – productivity is measured in terms of output per unit of input.
Productivity of labour is usually measured in terms of output per-worker-hour.
Productivity= output / input
The difference between production and productivity
It is important to be perfectly clear on the difference in the meaning of the words production and productivity.
Suppose two firms are making very similar footwear and have the following weekly outputs:
Firm X Pairs of shoes-10000
Firm Y Pairs of shoes-5000
We can say that firms X’s production is twice as that of Firm Y .But this statement tells us nothing about the efficiency of the two firms. If Firm X is using more than twice as much labour and capital as Firm Y, then its productivity is less than that of firm Y.
The main division of production or Stages of production
The many different industry producing goods and services are divided in to three board groups.
Primary industry: – Industry which carries out the first stage in the process of production is known as primary industry. It produces raw materials either by extracting them from the ground or by growing them. For example, agriculture, fishing, mining, quarrying, forestry etc.
Secondary industry: – Processing and manufacturing industry which carries out the second stage in the process of production is called secondary industry. Raw materials are changed to finish or semi finished product here. For examples, industries producing steel, furniture, clothing, footwear, motor cars, etc.
Tertiary industry: – A service industry is called a tertiary industry. Firms in this industry provide services of all kinds to firms in the primary and secondary industries. For example, services provided by banks, transports, insurance companies, communications etc.
Primary industries, secondary industries and tertiary industries are inter dependent .Without primary industries, a secondary industry cannot withstand. For example, a clothing manufacturing industry requires cotton as its raw materials to carry out its production. Raw materials are the product of primary industry. Raw materials are transferred to the clothing company through transport which comes under tertiary industry. In the modern society, the firms in the primary and secondary sectors would find it impossible to function without the services supplied by banks, insurance, transport and communication, warehouse etc
Most of the developing countries concentrate on primary sector. More than 70% of the labour force is engaged in agriculture.Inspite of this high degree of specialisation ,productivity is low.If the developing countries concentrate on increasing their productivity in primary production, they face the problem that most of these products have very inelastic demand. A large increase in world supplies might well reduce the incomes of the poorer countries.
But in the case oil it may not be applicable because oil is such a primary product having no perfect substitutes.
Developing countries should diversify their economy.It must change its method of production from primary products to labour intensive, low quality manufactured goods.So that the country can compete in world market.
Developing countries can concentrate on tourism industry. Tourism has high income elasticity of demand and is the fastest growth industry in the world.
Agricultural products and international trade
Agricultural products rely greatly on weather conditions and other natural factors like hurricane. So there is a high degree of uncertainty involved in relaying on exports of agricultural products. Moreover agricultural products are raw materials and therefore have relatively low prices in the world markets. So countries relaying on agricultural exports do not have much scope to increase their export revenue. Yet products from other sectors like manufacturing is relatively more stable and predictable, it reduces the uncertainty of income for the country. Also, agricultural output relatively lower life than manufactured goods and needs to be sold of quickly. Thus it relies less on exports of agricultural products and more on exports from other sectors.
The division of labour
Division of labour is the remarkable feature of modern production process. Division of labour means specialisation. The production of a goods or service is broken down into a large number of separate and simple operations.Each worker is specialise in one or two activities in the operation of production.This technique of breaking down of production into a large number of specialised tasks is described as the division of labour.The most striking examples are found in industries making cars ,television etc.These industries using assembly lines,where each worker fits a single component as the product moves down in the line.This system of production commonly known as mass production.
Advantages of division of labour
Advantages of division of labour are:
- Increase in productivity:- when workers become specialists in the jobs they do, repetition of the same operation increases the skill and speed of the worker and as a result more is produced.
- Time saving:-If a person had to do many different tasks then much time would be wasted switching from one task to another.
- Fall in cost of production
- Best use of ability:-with the division of labour there is a great chance that people will be able to do those things at which they are best and which interest them the most.
- Mechanised production process: – Division of labour will possible for mass production.
Disadvantages of division of labour are:
- Monotony: – work may become boring; a worker who performs the same operation each and every day is likely to become very bored.
- Lack of variety: – The goods produced under a system of specialisation are usually turned out in vast numbers and share the same design.
- Risk of unemployment:- Division of labour is the main feature of capital intensive production. So it may chance to reduce number of labours.
- Labour becomes too dependent upon each other.